COMMERCIAL LAW.

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By EDWARD C. REYNOLDS, Esq.


I.—LAW IN GENERAL.

It perhaps would be well for us to take a glance at the origin of the law which we are about to consider in its practical applications. In all our business relations, and in fact in our general conduct, so far as that term would apply to one as a member of a community and a citizen, we are controlled in our action by absolute, and in some instances possibly, by arbitrary regulations or laws, with which perhaps we may be wholly unfamiliar, but which are none the less binding and positive in their exactions because we have neglected to familiarize ourselves with their requirements.

It is a rule of law, that ignorance of it excuses no one. For this reason ignorance is never pleaded in court as an answer to civil or criminal allegations of any sort. This rule presupposes a knowledge of the law on the part of every citizen. While, strictly speaking, this is impossible and in reality but a fiction, any other provision would be fraught with danger. Although, through the observance of this rule, doubtless, hardships are occasioned—as in fact must result from the enforcement of any law, however wise—it is notwithstanding that, a very necessary and strictly proper presumption. Were it to be otherwise, any attempt to enforce obligations against dishonest parties or to punish crime would prove ineffectual, because recourse would always be had to this defense. Thus all law would be a nullity.

There is fortunately a safe rule to be adopted as a guide for our conduct, which in the main, if strictly obeyed, will obviate the seeming hardship. Notwithstanding the fact that all inhibitions do not involve an absolute wrong or right, that all enforcements of law are not with justice, yet if a strict standard of right and honorable dealings characterize individual action and conduct, for those who adopt such a course there is but slight possibility that there is any especial oppression in store.

But wrong doing exists. The remedy is existing law. What is it, which as such we are to obey, and which we may safely designate as the principle of personal protection?

The nucleus of the now voluminous laws of our country was the well established laws, customs and usages of the American colonies of Great Britain, when their independence was secured. At that time the laws of Great Britain had become so generally interwoven into our judicature as well as into our business customs and relations, that the introduction of a wholly new system of laws would have proved disastrous, even if it could have been accomplished.

Since, in part, law is the outgrowth of customs and ways, as we shall see, to have attempted the engrafting of a wholly new system would have been equivalent to an attempt to change at once the habits and characteristics of a people.

The familiarity of the colonists with the then existing law, and its adaptability to the then commercial transactions, made it a desirable nucleus—already for our people, with which they might inaugurate a system of their own.

This, then, was accepted as the common law of the country at that time. But however well adapted the then existing laws may have been to the wants of the people and commerce, ever changing conditions of life and ever increasing business complications rendered additions and new provisions necessary. These changes were made necessary and were fostered by statute law.

Statute law is the result of the deliberations of legislative assemblies. Each state has its own legislature and statute law, as has the national government. The general government being the superior power, its laws must be recognized as superior to state laws, that is, there can be no state law inconsistent with the laws of the national government. The state legislatures and national congress have power to make laws, and whatever is declared by these bodies to be the supreme law of the land, for the government of the individual and the protection of property, providing it does not conflict with the provisions of the national and state constitutions respectively, must be obeyed as such.

This then is statute law: An enactment regarding the rights of persons or property, passed by representatives of the people in legislature assembled.

When a question has arisen concerning which statute law has no provisions, or some regular enactment is so worded that its meaning is doubtful and extremely liable to be misunderstood, to compensate for the lack in the one instance and to interpret properly the intention of the law makers in the other, we resort to the common law, fairly said to be “the accumulated wisdom of centuries.” Analogy will lead us to conclude, and correctly, that this is the conservative element of the system—the origin of which we have previously alluded to in part—to which we would add the customs and usages which have, since our recognition as an independent people, received the sanction of our courts, and to become acquainted with which reference must be made to the published reports of the courts, known as the “U. S. Reports,” “Maine Reports,” etc.

That the common law may remain to a great extent unchangeable, much respect is paid to the decisions of the courts, by others than those by which they were enunciated, for it has ever been deemed better that a precedent be respected, even if it be not the soundest law, than to have what might seem to be better logic at the expense of a varying precedent. Then we conclude, that though legislatures be radical in the change of existing laws, yet in the task of applying or interpreting such laws, so changed, courts are generally very conservative. It will thus be seen that the rights of the people are not liable to be unwarrantably abridged or destroyed by any uncertain movement of a day.

By referring to our national and state constitutions, our readers will see that the powers of both national and state governments are divided into three departments, known as the executive, legislative and judicial, each of which is distinct from the others, although they work in harmony in the enactment and enforcement of the laws. The courts come under the head of that last named, and their duties have been demonstrated to be “to define, declare and apply the laws.”

Of this common and statute law a very essential part is that which is applicable to business, or commercial law, or, as it is generally denominated in the books, the “Law-Merchant.” Much of the law bearing upon this subject is the old common law, with the enlargements consequent upon an increased commercial activity. Here it is that we find many of the customs and usages of merchants gradually merging into recognized law. The three “days of grace” allowed on all commercial paper is but a common illustration of this, similar in origin to many customs in all departments of trade, which might easily be cited, and which were in their inception of very limited significance, but which have continually been receiving a more extended recognition, until we find them clothed with all the insignia of authority.

These customs and usages we shall have occasion to give more extended explanations as we touch upon the several sub-divisions of our topic. There are a few technical words which we shall find it convenient to use. Prof. Greenleaf clearly expresses the reason for this, as follows:

“A great deal of the language of every art or science or profession is technical (indeed, technical means belonging to some art), and is peculiar to it, and may not be understood by those who do not pursue the business to which it belongs. This is as true of the law as of everything else.… A good instance of this is in those words which end in er (or or) and in ee. As for example, promisor or promisee, vendor and vendee, indorser and indorsee. These terminations are derived from the Norman-French, which was for a long time the language of the courts and of the law of England. And it might seem that we had just as good terminations in English, in er and ed, which mean the same thing. But this is not so. Originally they meant the same thing, but they do not now, for both er and ee are applied, in law, to persons, and ed to things, so that we want all three terminations. For example, indorser means the man who indorses; indorsee the man to whom the indorsement is made; but the note itself we say is indorsed. So vendor means the man who sells, vendee the man to whom something is sold, and the thing sold is vended.”

In regard to the phrase “presumption of law,” to which we may have occasion to refer. The significance of this phrase is this: Under certain conditions, without absolute proof of the matter concerning which some conclusion is sought, the law will presume to interpret the intention or acts of persons. For instance, regarding criminal procedure, one is presumed to be innocent until he is proved to be guilty. Presumptions prevail only when proof is lacking.

CONTRACTS.

A contract has been aptly defined to be “an agreement to do or not to do some particular thing.” It may be verbal or in writing. If the conditions of a contract, whether verbal or written, be expressly stated and agreed upon, it is then termed an expressed contract. If on the other hand there are no well defined and specific agreements regarding the undertaking or the consideration to be paid for its accomplishment, it is called an implied contract.

The conditions of an expressed contract must be strictly complied with, and the parties to it are bound to faithfully observe the same, however onerous may be the burden, while the conditions of an implied contract not being agreed upon specifically, are such as custom may dictate. As an illustration of this: A agrees to pay B two dollars per day for labor. This is expressed, so far as the rate of wages is concerned; but the number of hours that shall be taken to constitute a day’s work is not agreed upon, and must be determined by implication. As a result, the question would be settled by the custom in such matters which obtained in the place where the contract was made. Or, if A engages B to undertake the building of a cottage, with no stipulations regarding the wages to be paid, B when the work is completed can recover for his compensation whatever is proved to be the usual and customary remuneration paid men in the same business and possessed of equal skill. The enforcement of obligations is no less strict when the standing of the contract is implied than when expressed, after determining what the obligations of the parties are.

The elements of a contract are parties, consideration, subject matter, mutual assent and time.

Parties.—Two or more competent persons may make a legal contract. Competent persons, it will be observed. What constitutes competency? Generally, legal age and sound mind; while minority, insanity, idiocy, intoxication and coverture are said to be the conditions of incompetency. With the exception of a few states where females become of age at eighteen, the legal age is twenty-one years. A consideration of the conditions of incompetency will sufficiently explain the requisites of competency negatively. Minors, or those who have not attained legal age, or infants as the law denominates them, are considered incompetent because of inexperience, and a fair presumption that unprincipled parties might take unfair advantage of them, and lead them into business complications which a riper experience would disapprove. The contracts of a minor approved by him when he becomes of age are binding, however; so that it will be observed, such contracts are not absolutely void, only voidable at the discretion of the minor. If an infant makes a transfer of real estate he may, on reaching his majority, compel the purchaser to reconvey the property, by returning to him the purchase money. The law would not permit him to retain the purchase price and compel the re-transfer, because it is not the policy of the law to assist the minor in his fraudulent purposes, but only to protect him from the impositions of those skilled in wicked devices. There are some contracts which an infant can not disclaim, viz.: such as are for necessaries. It is something of a question to determine what are necessaries; but the minor’s fortune and social position must be the guide, for where sufficient food and clothes might be all that would be termed necessaries for one, for another by fortune more favored, “equipage, dress and entertainments” would be considered just as essential.

Unsound Mind.—Insanity, or a mind deranged; idiocy, or the lack of a mind; intoxication, or a mind so beclouded as to be incapable of understandingly judging of the merits of an ordinary business transaction; a mind in any one of these conditions is unsound, and its possessor an incompetent.

Coverture, or marriage, by the common law made woman an incompetent party, and she was thus precluded from legally contracting. By statutory enactments nearly all of the states have changed this, so that a married woman may now do business, contract debts as though unmarried, and also hold property in her own right. The ancient barbarous theory that marriage ought to annul a woman’s right to property in her own name and almost deny her individual existence is nearly a relic, an error almost of the past.

Consideration.—Any consideration is sufficient to sustain a contract, provided it be not illegal, or that which is prohibited by law; immoral, or that which contravenes the moral law; and provided the contract was born of good faith, and not tainted by fraud. A contract into which any element of fraud has entered receives no countenance at the law. However favorable stipulations may seem, a fraudulent intent, proved, will nullify the contract.

The Subject Matter, or that concerning which the contract is made must not be illegal, immoral or impossible. The reasons for this are apparent, since it would controvert the very object of legal rights and public policy if an illegal or immoral undertaking were permitted to enter into a contract as a thing to be done and as a recognized right to be enforced; or, if a stipulation were permitted to stand, which called for the doing of that which is impossible.

Mutual assent is an essential element. “It takes two to make a trade.” There must be an agreement of minds between contracting parties as to what is to be done, and how, and in consideration of what; and this agreement must be at the same time, or to state it in a legal fashion, “minds must meet.”

The time stated for the performance of a contract should be agreed upon. In case it is not, then it must be accomplished within a reasonable time.

What is a reasonable time must be determined by the special circumstances of each individual case. It is with this as with other elements of a contract if not fully understood and agreed upon, the assistance of customs and usages must be invoked to settle the disputed point.

Statute of Frauds.—This is an old English statute, adopted, slightly modified, by the several states. It requires the following contracts to be in writing: For the conveyance of real estate; lease of land for more than one year; in consideration of marriage; to answer for the debt, default or wrongful act of another; not to be performed within one year; for the sale of personal property of a certain value (by most states placed at fifty dollars), unless the sale be by auction, or part of the purchase money be paid, or part of the goods delivered at the time of sale.

It is well that every man should be in a state of moral union with others; he must have one or more men to whom he can communicate the inmost feelings of his being, heart, and the reasons of his conduct; there should be nothing in him which is not known to some one else. That is the true meaning of the divine saying, “It is not good that man should be alone.”—Schleiermacher.

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